Heated steel prices

Steel prices

Local steel prices have been increasing at an unprecedented pace since the Ministry of Trade and Industry imposed anti-dumping duties on imported steel in June for four months. These have now been extended for two more months starting on 6 October.

Prices jumped from approximately LE10,000 per ton of rebar steel in June to reach roughly LE12,500 last month, before settling this week at around LE12,100.

The decision put 17 per cent anti-dumping duties of the cost insurance freight (CIF) value of rebar steel imported from China, 10-19 per cent on imports from Turkey, and 15 to 27 per cent on imports from Ukraine.

The sharp increase in price fluctuations, according to local manufacturers, is largely due to the increased cost of fuel in July following the slashing of subsidies and the hike in prices of raw materials, mainly billet. The latter is imported by Egyptian steel factories as local production does not cover all manufacturing needs.

“The extension of the anti-dumping duties is the right decision to protect the local steel industry,” said Rafik Al-Daw, chief executive officer of Suez Steel, adding that imported steel was being sold at uncompetitive prices and sometimes even lower than those in their countries of origin.

“Some governments give incentives to their steel manufacturers to encourage exports,” he explained.

The anti-dumping tariffs gave Egyptian manufacturers the chance to increase their production capacity in order to fill the gap between supply and demand, Al-Daw said. The decision to extend the duration of the duties was taken following a series of meetings and calls from local manufacturers heavily affected by imported steel. A number of factories stopped operations earlier this year.

“The total production capacity of local factories is estimated at 12 million tons per year, while current production is less than seven million tons,” Al-Daw said, who is also a board member of the metallurgical industries division at the Federation of Egyptian Industries.

Many local factories have opted to sell steel products at rates lower than production costs to compete with imported steel sold at unfair prices, he stated, adding that “we need time to increase production to compensate for such losses.”

While the anti-dumping duties were issued in June, the General Organisation for Export and Import Control announced recently that Egypt’s imports of rebar steel witnessed a sharp decline during the first half of 2017, at approximately 264,000 tons compared to 1.25 million tons in the same period of 2016, or a 74 per cent decline.

Ahmed Al-Zeini, head of the building materials division at the Cairo Chamber of Commerce, said the reason for this had been rumours since the beginning of the year that the Ministry of Trade and Industry would issue anti-dumping duties, making importers stop their purchases out of fears that by the time their shipments arrived the new tax would be issued.

Al-Zeini said that the latest series of rises in steel prices was due to the lack of sufficient quantities of imported rebar steel as a result of the anti-dumping tax.

Although intended to protect local manufacturing, the anti-dumping duties had led to the reduction of competition in the market and consequently hurt the end customer, he said. “There should be some governmental control over the local pricing of steel products,” he added.

He stated that steel traders commonly made deals with clients for a real-estate project, for example, and the project then had to be supplied with steel products at a certain date and price according to the agreement. The fluctuations in the prices of steel affected the stability of such projects, and steel traders could lose money if factory prices went up over a short period of time.

Al-Daw expects that rebar steel prices will go down in the near future as a result of a decline in global price of billet to about $500 per ton. It earlier stood at $540 per ton.